Absa Bank has committed to expanding its lending to green projects and allocating at least 10 percent of capital to climate finance by 2025 to promote green energy, green buildings, and sustainable agribusiness.
The Bank, which participated in Kenya’s first green bond project with Acorn Holdings Africa, said it is assessing a deals pipeline for viable projects that could be rolled out in the next couple of years. Absa has also engaged experts from the International Finance Corporation (IFC) in mapping out capital financing portfolios towards renewable and clean energy products compliant with global standards.
Speaking during a side event, Absa Bank Chief Finance Officer Mr Yusuf Omari disclosed that banks are keen on pursuing clean energy projects because they are financially viable and deliver on sustainable goals.
Currently, we have already deployed KES 60 billion across sustainable investment, financing, and our operational activities to help accelerate climate transition and advance inclusive growth. We aim to double this by 2025 as we continue to live up to our commitment of creating shared value and being a Force for Good in our society, Mr Omari said.
Absa Bank convened a side event at the Africa Development Bank (AfDB) to unpack how financial institutions can harness Africa’s resources to support climate finance and transform our tomorrow. The discussions unpacked the role of local finance institutions, pension funds and development partners in channeling resources to help companies make a just transition to clean energy.
Local institutions especially have a more significant role to play given the global trends that have seen capital flow out of the country as foreign investors find emerging and frontier markets too risky. When the developed markets of the US, the UK, and the EU began raising rates to tackle high inflation from mid-2022, Central Banks tightened their monetary policy to control the flow of money. As a result, Africa suffered disproportionately from capital outflows.
These shifts in global trends have treated Africa as generally risk-averse, ignoring exceptional stories of growth on the continent and untapped potential, especially in spearheading the shift to clean energy, where Africa could potentially lead the world in energy transition.
According to a study by UNEP in 2023, Africa’s green business opportunities are abundant. Africa can become a trailblazer in renewable energy solutions with abundant solar, wind, hydro, biomass, and geothermal resources that may contribute to a 6.4 per cent increase in GDP from 2021 to 2050.
An annual funding gap in climate financing of $213.4 billion in Africa offers innovative investors and players within the finance sector a chance to make an impact by building Africa’s climate resilience.
